TMI Blog1995 (12) TMI 391X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer; the manner in which such income has been derived; and the additional amount of income-tax payable on such income. The proviso attached to section 245C(1) places a ban on making of a settlement petition unless two further requirements are complied with by the applicant. These are that the assessee has furnished the return of income which he is or was required to furnish under the Act; and the additional amount of income-tax payable on the income disclosed in the application exceeds ₹ 50,000. All the above conditions contemplated under section 245C(1) are sine qua non for a valid application and in the absence of them or any one of them the petition for settlement will not be in order. 3. The other provision which is relevant for our purposes is section 245D which sets out the procedure to be followed by the Settlement Commission when an application for settlement is received by it. We are concerned with the provisions contained in sub-section (1) of that section. On receipt of an application for settlement, the Settlement Commission is required to take its decision whether to allow the application to be proceeded with or to reject it summarily. It provides that o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This assessment was completed by an assessment order dated 30-3-1992 (vide Annexure 14 to the writ petition). On an appeal, the assessment order was upheld substantially by the Commissioner (Appeals) by his order dated 26-8-1992. and in respect of certain minor items the matter was remanded for fresh consideration to the Assessing Officer. However, an addition of ₹ 1 lakh that was made on account of low withdrawal by the partners was deleted by the appellate authority. For the third assessment year, i.e., 1990-91, against the returned income of ₹ 83,380, the assessment was completed on an income of ₹ 1,15,41,465, and the matter is said to be pending with the Commissioner (Appeals). The assessment order for this year was made on 24-3-1993. 5. It may be noticed that the additions made to the returned income in the assessment years under dispute were of diverse nature and under different heads. To mention a few, the additions were on account of inflated expenditure, bogus purchases and selling of Government wheat in open market and, bogus cash credits appearing in the name of certain persons who were found to be non-existent and the confirmatory letters filed fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ample opportunity to have its say before the statutory authorities constituted under the Act at what ever level the matters are pending for the assessment years under dispute. 9. It was next contended that there were only two requirements for admission of an application for settlement, viz., the assessee should make (i) full and true disclosure of income, which had not been disclosed before the Assessing Officer, and (ii) there must be 'complexity of investigation' involved. The learned counsel urged that both these requirements were made out in the instant case, and the Settlement Commission has unnecessarily evolved the theory of 'confrontation test', for which there was no warrant. On the scope and ambit of section 245C(1), the contentions urged on behalf of the petitioner may be stated in petitioner's own words as contained in paragraph 29 of the writ petition, which reads as under: On a plain reading of section 245C(1), disclosure before the Settlement Commission has to be of income not declared in the return filed before the ITO. It is immaterial whether the disclosure is made before the ITO has started his enquiries or afterwards. Disclosure canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t disclosed till then together with the manner in which the said income is derived. It is not meant for those who come after the event, i.e., after the discovery of the particulars of income and its source. 10. Chapter XIX-A providing for settlement of cases was introduced in the Income-tax Act by the Taxation Laws (Amendment) Act, 1975 pursuant to the recommendations of the Direct Tax Enquiry Committee headed by Justice Wanchoo. The provisions with which we are concerned, and for that matter the scheme under the said Chapter, have been the subject-matter of consideration before the Apex Court in several cases. In CIT v. B.N. Bhattachargee [1979] 118 ITR 461, the Supreme Court observed that it would not be inappropriate to state that the policy of law as disclosed in Chapter XIX is not to provide a rescue shelter for big tax dodgers who indulge in criminal activities by approaching the Settlement Commission. The Settlement Commission will certainly take due note of the gravity of economic offences on the wealth of the nation which the Wanchoo Committee had emphasized and will exercise its power of immunisation against criminal prosecution by using its power only sparingly and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal which explained the Scheme underlying Chapter XIX-A of the Act. Except for stating the objection noted above, the learned counsel for the petitioner did not elaborate his contention and failed to substantiate the objection urged before us. Secondly, by the said Finance Act, sub-section (1A) of section 245D, as it existed at that time, was deleted and by the same Finance Act, second proviso to sub-section (1) of section 245D was inserted. Under the pre- amendment provision, the Commissioner was entitled to object to the admission of a settlement application on the ground that concealment of particulars of income on the part of the applicant or perpetration of fraud by him by evading any tax or any other sum chargeable or imposable under the Indian Income-tax Act, 1922 (Act No. XI of 1922) or under this Act, has been established or is likely to be established by any tax authority in relation to the case . However, the Settlement Commission by virtue of the provisions contained under the proviso to sub-section (1A) had the final say inasmuch as, if the Settlement Commission was not satisfied by the correctness of the objection raised by the Commissioner, the Settlement C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the power to proceed even without the report of the Commissioner if he failed to submit the report within the period prescribed under the second proviso to section 245D(1). 15. It is not possible to conceive of every situation in which the discretion vested with the Settlement Commission is to be exercised in one way or the other. There is nothing in the amended provision of section 245D(1) which restricts the Commission to reject an application for settlement on its being satisfied, on the basis of the Commissioner's report or otherwise, that a case of concealment has been established or concealment of particulars of income on the part of the applicant or perpetration of fraud by him for evading tax is likely to be established by income-tax authorities in relation to a case. Since section 245D gives jurisdiction to the Settlement Commission to proceed with the settlement application or to reject the same, the High Court has no jurisdiction to interfere except within the limited sphere in which the orders of quasi-judicial authorities are disturbed on the well-settled principle in exercise of writ jurisdiction by the High Court under article 226 of the Constitution. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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